1. Individual
An individual refers to a natural human being, whether male or female, who is considered a taxpayer under the Income Tax Act. Every person, as long as they are alive, falls under this category. Individuals are assessed for income tax based on their earnings from various sources such as salary, business profits, capital gains, house property, and other sources.
2. Hindu Undivided Family (HUF)
A Hindu Undivided Family (HUF) is a legal term used in India to describe a family comprising all persons lineally descended from a common ancestor, including wives and unmarried daughters. It is governed by Hindu Law and has a ‘Karta’ who manages the affairs of the family’s estate. HUF is considered a separate taxable entity distinct from its members, and it can earn income and claim deductions under the Income Tax Act.
3. Company
A company is an artificial legal entity created under the provisions of the Companies Act or other relevant statutes. It is treated as a separate legal person distinct from its shareholders. Companies can be classified into various types like private limited, public limited, government company, etc. They are taxed on their profits under corporate tax rates applicable for the Assessment Year.
4. Firm
A firm refers to a partnership of two or more persons who have agreed to share profits of a business carried on by all or any one of them acting for all. Unlike a company, a firm does not have a separate legal entity from its partners. It files income tax returns as a partnership firm and is taxed at the rates applicable to partnerships.
5. Association of Persons (AOP) or Body of Individuals (BOI)
An Association of Persons (AOP) or Body of Individuals (BOI) refers to a group of individuals, companies, firms, or other entities who come together for a common purpose that leads to income generation. This could include joint ventures, cooperative societies, clubs, mutual concerns, etc. AOP/BOI is assessed as a separate entity for income tax purposes.
6. Local Authority
Local Authorities include municipalities, panchayats, municipal corporations, cantonment boards, port trusts, etc. These are governmental bodies established for local administration and are treated as separate taxable entities under the Income Tax Act.
7. Artificial Juridical Person
Artificial Juridical Persons are entities created by law and recognized as having a legal personality distinct from the individuals who form it. Examples include universities, public corporations established by special Acts of legislature, statutory bodies, etc. They are taxed independently under their respective tax provisions.
Taxation and Assessment
Each category of person under the Income Tax Act has specific tax treatment, deductions, exemptions, and compliance requirements. Understanding these classifications helps in determining the correct tax liability, filing requirements, and ensuring compliance with the provisions of the Income Tax Act.
These definitions and classifications are crucial for taxpayers, tax professionals, and authorities to ensure accurate assessment and taxation of income in India.